A federal judge on Tuesday rejected the National Rifle Association’s Chapter 11 bankruptcy filing, forcing the nonprofit to try to resolve its legal dispute with the state of New York out of court.
U.S. Bankruptcy Judge Harlin Hale of Dallas ruled that the pro-gun-rights group did not file its bankruptcy petition “in good faith” but instead did so “to gain an unfair litigation advantage” and “to avoid a state regulatory scheme.”
Those purposes are not a proper use of the bankruptcy code, the judge ruled.
The dismissal of the case comes after bankruptcy watchdogs questioned the legitimacy of the NRA’s bankruptcy filing, saying the organization did not qualify as an organization in need of debt reduction.
When it filed for bankruptcy Jan. 15, the group had said it was in “its strongest financial condition in years.”
But the NRA said it faced a potentially existential crisis due to legal challenges by the New York attorney general. The group said it was hoping to use bankruptcy to restructure its operations and shift its nonprofit registration from New York to Texas, where it believed its mission would be more welcome.
The group faces accusations that its leaders misused funds for personal reasons.
This story is developing.
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